Figure 13.1
-Which is a plausible cause of the movement in Figure 13.1 from point 1 to point 2?
A)a change in expectations that causes a decline in the real interest rate for investments
B)a decrease in expected inflation
C)the economy's self-correcting mechanism
D)the central bank achieves a negative value for the nominal interest rate
E)none of the above

Question

Figure 13.1 
-Which is a plausible cause of the movement in Figure 13.1 from point 1 to point 2?
A)a change in expectations that causes a decline in the real interest rate for investments 
B)a decrease in expected inflation 
C)the economy's self-correcting mechanism 
D)the central bank achieves a negative value for the nominal interest rate 
E)none of the above

Quizplus · Accepted Answer

A change in expectations that leads to a decline in the real interest rate for investments can cause an economy to move from one point to another on its aggregate demand curve, as it affects investment spending, thereby impacting the overall demand in the economy.

Figure 13.1 -Which Is a Plausible Cause of the Movement in Figure